UNIT 2

MARKETING MANAGEMENT AND STRATEGIC PLANNING

TEXT A

MARKETING MANAGEMENT PHILOSOPHIES

Most people think of a marketing manager as someone who finds enough customers for the company's current output. But this view is too limited. Every organization has a desired level of demand for its products. At any point in time, there may be no demand, adequate demand, irregular demand, or too much demand. Marketing managers, therefore, can be concerned not only with finding and increasing de­mand but also with changing or even reducing it.

We define marketing management as the analysis, planning, im­plementation, and control of programs designed to create, build, and maintain beneficial exchanges with target buyers for the purpose of achieving organizational objectives.

What philosophy should guide marketing efforts? What weight should be given to the interests of the organization, customers, and society? Very often these interests conflict.

There are five alternative concepts under which organizations con­duct their marketing activities: the production, product, selling, mar­keting, and societal marketing concepts.

The production concept holds that consumers will favor products that are available and highly affordable and that management should therefore focus on improving production and distribution efficiency. This concept is one of the oldest philosophies guiding sellers.

The production concept is a useful philosophy in two types of situations. The first occurs when the demand for a product exceeds the supply. Here, management should look for ways to increase produc­tion. The second situation occurs when the product's cost is too high and improved productivity is needed to bring it down. For example, Henry Ford's whole philosophy was to perfect the production of the Model Т so that its cost could be reduced and more people could af­ford it. He joked about offering people a car of any color as long as it was black. Today, Texas Instruments (ТІ) follows this philosophy of increased production and lower costs in order to bring down prices.

It won a major share of the American hand-calculator market with this philosophy. But when ТІ used the same strategy in the digital watch market, it failed. Although they were priced low, customers did not find TI's watches very attractive. In its drive to bring down prices, ТІ lost sight of something else that its customers wanted— namely, attractive, affordable digital watches.

Another major concept guiding sellers, the product concept, holds that consumers will favor products that offer the most quality, per­formance, and features, and that an organization should thus devote energy to making continuous product improvements. Some manufac­turers believe that if they can build a better mousetrap, the world will beat a path to their door. But they are often rudely shocked. Buyers may well be looking for a solution to a mouse problem, but not neces­sarily for a better mousetrap. The solution might be a chemical spray, an exterminating service, or something that works better than a mousetrap. Furthermore, a better mousetrap will not sell unless the manufacturer designs, packages, and prices it attractively, places it in convenient distribution channels, brings it to the attention of people who need it, and convinces them that it is a better product.

The product concept can also lead to «marketing myopia. For in­stance, railroad management once thought that users wanted trains rather than transportation and overlooked the growing challenge of airlines, buses, trucks, and automobiles. Many colleges have assumed that high school graduates want a liberal arts education and have thus overlooked the increasing challenge of vocational schools.

Many organizations follow the selling concept, which holds that consumers will not buy enough of the organization's products unless it undertakes a large selling and promotion effort. The concept is typi­cally practiced with unsought goods—those that buyers do not nor­mally think of buying (say, encyclopedias and funeral plots). These industries must be good at tracking down prospects and selling them on product benefits.

The selling concept is also practiced in the nonprofit area. A politi­cal party, for example, will vigorously sell its candidate to voters as a fantastic person for the job. The candidate works in voting precincts from dawn to dusk, shaking hands, kissing babies, meeting donors, making speeches. Much money is spent on radio and television ad­vertising, posters, and mailings. Candidate flaws are hidden from the public because the aim is to get the sale, not worry about consumer satisfaction afterward.

The marketing concept holds that achieving organizational goals Depends on determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors. Surprisingly, this concept is a relatively recent busi­ness philosophy. It emerged only during the 1950-s. The marketing concept has been stated in such colorful ways as «Find a need and fill it» (Kaiser Sand & Gravel); «We do it like you'd do it» (Burger King); and «We're not satisfied until you are» (GE). J. C. Penney's motto also summarizes the marketing concept: «To do all in our power to pack the customer's dollar full of value, quality, and satis­faction».

The marketing concept views the consumer as the focal point of all marketing activities. Organizations that practice the marketing con­cept study the consumer to determine consumer's needs and wants and then organize and integrate all activities within the firm toward helping the consumer fulfill these needs and wants while simultane­ously achieving organizational goals. There are three pillars to the marketing concept) (1) consumer orientation, (2) integrated or total company effort, and (3) achievement of organization goals.

The consumer orientation dimension of the marketing concept argues that a firm can be more successful if it determines what the consumer needs and wants before it decides what product to produce and/or sell.

To successfully practice the principle of consumer orientation firms need to regularly conduct marketing research. Marketing re­search is the systematic collection, recording, and analyzing of data that deal with the marketing of goods and services. The tools of mar­keting research allow the firm to assess consumers' needs-wants.

Regardless of how much marketing research is conducted, no or­ganization can be certain of consumers' wants and needs. This is es­pecially true with new product development or anticipatory manufac­turing. For instance, Firestone Tire Company must produce snow tires in the summer for the coming fall and winter season. No matter how much research Firestone conducts it will still face some uncertainty about the weather and therefore may overproduce or underproduce snow fires for the coming season. Consequently, the role of good ex­ecutive judgement in marketing decision-making cannot be ignored. Since marketing is not a precise science, good subjective judgement resulting from years of «hands on» experience is also a key to suc­cessfully implementing the marketing concept.

A second pillar of the marketing concept is the principle of inte­grated effort, in which departments within the organization work to­gether toward the common goal of satisfying the customer. Integrated effort is a systems point of view, in which all departments recognize they are interdependent parts of an organization. Because they are in­terdependent, they must cooperate to enable the firm to achieve its objectives. Cooperation is often difficult because one department's goals may conflict with those of another department and with the or­ganization's overall objectives.

Several types of conflicts can develop between departments within an organization. One type is the inherent conflict between low unit production costs and high consumer satisfaction. For instance, if Sony were to standardize all its television production processes to produce 8 single-size black and white television in a single style than it could achieve significantly lower costs per television produced. However, this would hurt Sony's marketing efforts because most consumers want variety and selection when purchasing a new television.

Organizational goals. The final pillar of the marketing concept states that the organization should engage in exchanges based on their potential for helping the organization achieve its goals. Organizations do not participate without expecting something in return, and what they receive should help them achieve their objectives.

The societal marketing concept holds that the organization should determine the needs, wants, and interests of target markets. It should then deliver the desired satisfactions more effectively and efficiently than competitors in a way that maintains or improves the consumer's and the society's well-being. The societal market­ing concept is the newest of the five marketing management philo­sophies.

The societal marketing concept questions whether the pure mar­keting concept is adequate in an age of environmental problems, re­source shortages, rapid population growth, worldwide inflation, and neglected social services. It asks if the firm that senses, serves, and satisfies individual wants is always doing what is best for consumers and society in the long run. According to the societal marketing con­cept, the pure marketing concept overlooks possible conflicts between short-run consumer wants and long-run consumer welfare.

The societal marketing concept calls upon marketers to balance three considerations in setting their marketing policies: company profits, con­sumer wants, and society's interests. Originally, most companies based their marketing decisions largely on short-run company profit. Eventually, they began to recognize the long-run importance of satisfying con­sumer wants, and the marketing concept emerged. Now many companies are beginning to think of society's interests when making their marketing decisions. Many of them have made large sales and profit gains by prac­ticing the societal marketing concept.

I. Key terms:

Production concept — концепція вдосконалення виробництва — the philosophy that consumers will favour products that are available and highly affordable and that management should therefore focus on im­proving production and distribution efficiently.

Product concept — концепція вдосконалення товару — the idea that con­sumers will favour products that offer the most quality, performance, and features and that the organization should therefore devote its energy to making continuous product improvements. A detailed version of the new-product idea stated in meaningful consumer terms.

Selling concept — концепція інтенсифікації комерційних зусиль — the idea that consumer will not buy enough of the organization's product unless the organization undertakes a large-scale selling and promotion effort.

Marketing concept — концепція маркетингу — the marketing manage­ment philosophy that holds that achieving organizational goals de­pends on determining the needs and wants of target markets and de­livering the desired satisfactions more effectively and efficiently than competitors do.

Societal marketing concept — концепція соціального маркетингу — the idea that the organization should determine the needs, wants, and in­terests of target markets and deliver the desired satisfactions more ef­fectively and efficiently than competitors in a way that maintains or improves the consumer's and society's well-being.

II. Vocabulary notes:

hold, v.

1) have or keep in one's possession; keep fast or steady, in or with the hand(s), arm(s) or other part of the body e.g. teeth, or with a tool — тримати, держати, утримувати;

hold the line — keep a telephone connection — не класти телефонну трубку;

2) restrain; keep back; control — утримувати; стримувати, за­тримувати, зупиняти, спиняти; зберігати контроль (над чимось);

hold one's breath — затамувати подих;

hold one's tongue — три­мати язик за зубами;

3) keep or maintain sb/sth in a specified position, manner, attitude or relationship — тривати, триматися, стояти.

4) be filled by; have the capacity to contain or accommodate — вміщувати, містити в собі;

hold sth in one's head — retain, not to forget — утримувати в пам'яті;

(not) hold water — (not) be sound, valid, logical — (не) бути обґрунтованим, (не) витримувати кри­тики; your argument doesn't hold water.

5) keep interest or attention of— заволодівати (увагою);

6) consider, regard, believe, affirm — гадати, вважати;

7) be the legal owner or possessor of sth — володіти, мати, бути власником;

hold shares/stock/land (share holder, stock holder, land holder) — бути власником акцій (цінних паперів, землі);

8) occupy; have the position of— посідати, обіймати (посаду);

9) have, conduct, cause to take place, hold a meeting/debate/examination — влаштовувати, організовувати, проводити (збори, об­говорення, іспити);

10) mark, celebrate — відзначати, святкувати.

favour, n. (US = favor)

1) a friendly regard, willingness — прихильність, доброзичливість;

2) aid, support — підтримка, допомога, сприяння; in favour of—

a) in sympathy with; on the side of— на захист; за; на чиємусь боці;

b) on behalf of; to the advantage or account of— на користь;

3) treatment that is generous, lenient; partiality — заступництво;

4) act of kindness — послуга, ласка, люб'язність, ласкавість;

do sb a favour; do a favour for sb — зробити послугу.

favour, v.

1) show favour to; support — ставитися прихильно, доброзичливо, підтримувати; допомагати;

2) treat with partiality; show more favour to one person, group, etc. than to another — вступатися, підтримувати, віддавати перевагу;

3) (of circumstances) make possible or easy — сприяти, бути сприятливим;

most favoured nation clause — режим найбільшого сприяння (наприклад у торгівлі) для країни — clause (in a com­mercial treaty) agreeing that a nation shall be accorded the lowest scale of import duties;

4) resemble in features — нагадувати, бути схожим;

The child favours its father — дитина схожа на батька.

challenge, n.

1) invitation or call to play a game, run a race, have a fight, etc. to see who is better, stronger, etc. — виклик (на змагання, дуель тощо);

2) doubt — сумнів;

3) claim — претензія;

4) problem — проблема, складне завдання;

face the challenge — натрапляти на проблему;

meet the challenge — розв'язувати про­блеми, вирішувати завдання, відповідати на виклик (напр, конку­рентів);

offer the challenge — відкривати перспективи.

challenge, n.

1) (to) give, send, be a challenge to — кидати виклик, викликати; заперечувати, оспорювати, піддавати сумніву;

2) challenge a juryman (leg.) — object to being a member of the jury — відхиляти присяжних, відводити присяжних;

3) object to; to argue — заперечувати, оспорювати, піддавати сумніву.

deliver, v.

1) take (letters, parcels, goods, etc) to places to which they are ad­dressed, to the buyer(s) — розносити, доставляти, передавати, вручати;

2) give forth in words, deliver a speech; deliver a course of lec­tures — виголошувати (промову), читати курс лекцій;

3) (up/over) (to); hand over, give up, surrender — офіційно пере­давати (щось комусь); відмовлятися від чогось на чиюсь користь;

4) launch, send against — завдавати;

deliver a blow — завдавати удару.

delivery, n.

1) delivery (uncountable) of letters, goods, etc.; (countable) deliveries — periodical performance of this — доставляння, рознесення, видача, вручення, передача, постачання;

express delivery — тер­мінове постачання (доставка);

recorded delivery — доставка реко­мендованої кореспонденції;

take delivery — отримувати достав­лений товар; одержувати виконане замовлення;

delivery note — накладна;

2) (sing, only) manner of speaking (in lectures, etc.) — виголошення (промови), манера розмовляти, дикція;

guide, v.

1) act as a guide ( a person who shows others the way) — вести, бути провідником, гідом;

2) direct — керувати, управляти;

3) influence — стимулювати, надихати; guide-line (usu pl.) ad­vice from sb. in authority on policy — головні напрямки; guidelines on prices and income.

assess, v.

1) decide or fix the amount of (e.g. a tax or a fine) — визначати розмір (податку, штрафу); визначати розмір шкоди;

2) appraise; fix or decide the value of (e.g. property), the amount of (e.g. income), for purposes of taxation — оцінювати майно для оподаткування;

3) test the value of— оцінювати.

assessment, n.

1) (uncountable) assessing; (countable) amount assessed — оці­нювання майна для оподаткування, оподаткування; розмір по­датку;

2) testing the value of— оцінка, думка, судження.

neglect, v.

1) pay no attention to; give no or not enough care to — нехтувати, зневажати; не дбати (про щось); не звертати уваги, не турбуватися (про щось);

2) omit or fail (to do sth.); leave undone (what one ought to do) — занедбувати, забувати, не виконувати (обов'язків), не помічати, ігнорувати.